2/09/2010 @ 4:57PM

Leave The Credit Card, Take The Cell Phone

Small business owners, listen up: Rachel Wallace, marketing director at Wallace Oil in La Junta, Colo., has a new “big box” killer. (Thought that would get your attention.)

Wallace Oil owns and leases six gas stations and a convenience store, and Wallace is always looking for ways to land new customers and keep her existing ones coming back. Last spring The State Bank of La Junta showed her a demonstration of a new mobile payment service powered by Bling Nation. “I signed up after two minutes,” says Wallace, who is also president of the local Chamber of Commerce.She has company: About 80 merchants now use Bling in the La Junta area, she adds. That’s pretty good penetration for the most populous city of Otero County (pop: 7,568).

Bling Nation’s service involves two pieces of hardware: a postage-stamp-size microchip that sticks to the back of any cell phone and a point-of-purchase scanner (much like a credit card machine). State Bank hands out the chip for free to its customers and sells the readers to merchants. All a customer has to do is wave a cell phone past the reader and the transaction is instantly recorded.

Cost to the merchant: $40 per month, including the point-of-sale Bling terminal and a subscription fee. On top of that, merchants also pay a transaction fee of about 1.5% of the value of each purchase. (Thus far, Wallace has been using the service for free as part of a promotional offer.)

Why bother? Because the new system saves a bundle on transaction fees, says Wallace. Credit card processing involves $800 for the machine, $15 per month in subscription fees and a 3% to 5% transaction fee, depending on the type of card used. Bling Nations 1.5% transaction fee is significantly less.

The other reason: Gas is gas, which means Wallace needs an edge in getting new customers in the door. Their incentive: a 3% cash-back reward from the bank on each purchase. Merchants who use Bling can offer their own rewards programs, too.

Since Wallace started this program six month ago she has received more than 200 transactions a month from customers using their Bling-equipped cell phones. While she can’t provide exact figures, she says she is seeing more volume from familiar faces. In sum: “We’re leveling the playing field with our big-box competitors,” she says.

That’s not all. Payments made by credit card companies generally took two or three days to settle into her bank account. Bling Nation payments land in her account the very same day. If all of her customers used cell phones instead of credit cards, Rachel figures she could save thousands of dollars per month in lost interest on the float.

“The more people spend with our local merchants, the more money stays in our local banks and the more local taxes go back into our coffers to improve the community,” says Wallace. “Thats why this mobile payment service is so popular in our community.”